INTERNATIONAL BUSINESS; Chinese Energy Giant to Buy Stake in Nigerian Oil Field

By DAVID BARBOZA

Published: January 10, 2006

Cnooc, the giant state-owned Chinese energy company, said Monday that it would pay nearly $2.3 billion in cash to acquire a large stake in a Nigerian oil and gas field, one of the biggest overseas acquisitions by a Chinese company.

With the deal, Cnooc would acquire almost half of an oil field in the Niger Delta, one of the world's largest oil and gas basins. The field is believed to hold more than one billion barrels of oil and is operated by the French oil company Total, which also has a large interest in the project. Cnooc has also committed itself to spending $2.25 billion over the next few years to help develop the field. In late summer,

Cnooc -- its official name is the China National Offshore Oil Corporation -- made a $18.5 billion bid to acquire Unocal, which was eventually bought by Chevron. That attempt rocked energy markets, symbolizing to many not only China's growing influence on global energy markets but its relentless rise on the world stage.

The contest for Unocal quickly turned into a political fight over whether a Chinese state-owned oil company, which some argued was a proxy for the Chinese government, should be allowed to acquire important American energy assets. Cnooc lost the battle after American politicians voiced their opposition and Chevron raised its bid.

But Monday's move was a signal from Cnooc that it was back in the hunt for global energy assets. The company said it would pay $2.28 billion cash to acquire a 45 percent interest in an offshore oil license it acquired from South Atlantic Petroleum of Nigeria, a privately owned company that is reportedly controlled by a former defense minister, Theophilus Danjuma, and other, undisclosed investors.

If the deal, which requires the approval of the Nigerian government, is completed, it would be the biggest ever for Cnooc and one of the largest overseas acquisitions ever by a Chinese company. The largest so far was the $4.2 billion purchase in October of PetroKazakhstan by China National Petroleum, China's largest state-owned oil company.

Cnooc's chairman and chief executive, Fu Chengyu, said in a statement that the company's expansion plans were back on track.

''This transaction is perfectly aligned with Cnooc's long-term strategy of achieving growth through the exploration and development of offshore fields and achieving geographic diversification of the company's portfolio,'' he said.

Cnooc, one of China's most aggressive energy companies, has spent nearly $2 billion over the last few years acquiring overseas oil and gas exploration assets in countries like Australia, Indonesia, Vietnam, Thailand, Bangladesh and Azerbaijan.

In seeking to meet booming domestic demand, Chinese oil companies have moved quickly to sign deals even in countries like Iran and Sudan, sometimes bringing Beijing into conflict with Washington's foreign policy goals.

The Nigerian assets Cnooc won on Monday had earlier been promised to the Oil and Natural Gas Corporation of India last month for about $2 billion, but that bid was blocked by India's cabinet. The cabinet was concerned about the transparency of the Nigerian ownership, according to Bloomberg News.

India's oil minister, Mani Shankar Aiyar, on Monday called for China and India to cooperate on energy deals rather than compete as rivals, and talks are planned for this week, news service reports said.